Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
August 31, 2012
[Addressee]
Case Number: 143522r
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Supply of Bottled Juice
Thank you for your letter received by us on [mm/dd/yyyy] requesting reconsideration of our ruling dated May 17, 2012, regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [#] ml bottles of […] juice blends.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand from your earlier correspondence, supplemented by web content […] and product labelling, that:
1. [The company]. produces two products:
a. […] [juice blend A] [describes concentration and ingredients]; and
b. […] [juice blend B] [describes concentration and ingredients].
2. Both products are sold in [#] ml bottles that are sealed […].
3. […] [weight of raw fruit used in production].
4. Bottle labelling suggests individuals […] [suggested serving size]
5. Bottle labelling provides nutritional facts corresponding to [#] ml of the products.[…]
6. The products are sold and marketed as […]beverages and are sold individually by the bottle.
7. The products are sold in pharmacies, health stores, […], and grocery stores.
RULING REQUESTED
You would like to know if the supply of your […] juice blends, in [#] ml bottles, is subject to GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the supply of your […] juice blends in [#] ml bottles is subject to GST/HST pursuant to subsections 165(1) and 165(2).
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
Section 1 of Part III of Schedule VI to the ETA zero-rates, or taxes at 0%, supplies of food and beverages for human consumption (“basic groceries”) and sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food and beverages, unless any one of the exclusions, as set out in paragraphs 1(a) through (r), is applicable.
Supplies of beverages (other than unflavoured milk), or pudding, including flavoured gelatine, mousse, flavoured whipped dessert product or any other products similar to pudding are excluded from zero-rating under paragraph 1(n) of Part III of Schedule VI, except
(i) when prepared and pre-packaged specially for consumption by babies,
(ii) when sold in multiples, pre-packaged by the manufacturer or producer, of single servings, or
(iii) when the cans, bottles or other primary containers in which the beverages or products are sold contain a quantity exceeding a single serving.
Your Web site promotes your products as […]. We agree that your products are beverages in the normal sense.
In reference to the exclusion noted, a can, bottle or other primary container in which a beverage is sold is considered to be a single serving when the beverage’s volume is less than 600 ml. In addition to volume, the Canada Revenue Agency considers the manner in which a beverage is packaged, marketed and promoted to determine if it is a single serving. For example, the supply of tomato or vegetable juice in a 540 ml sealed can (i.e., a can without a built-in opening device) is zero--rated even though the volume is under 600 ml. Tomato and vegetable juices supplied in these quantities and in this type of container are not marketed and promoted as single servings.
Although we acknowledge your products’ labelling encourages daily consumption of […] ml per day, the consumer is not discouraged to exceed this threshold. It would not be unreasonable for a person to consume the entirety of the bottle in a single occasion. Further, we cannot differentiate your products from the multitude of other fruit beverages available in the market and sold in containers of less than 600 ml (for example, […] juice).
In consideration of all the facts, the Canada Revenue Agency considers your […] juice blends, sold in volumes of less than 600 ml, to be single servings of beverages and therefore excluded from the zero-rating provision pursuant to paragraph 1(n) of Part III of Schedule VI.
With respect to your view that subparagraph 1(q)(ii) of Part III of Schedule VI supports your contention that your products should be zero-rated, please note that it is only applicable to products described in paragraph (m). That is to say, the referenced subparagraph only applies to supplies of cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, and similar products. This subparagraph does not apply to beverages.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-7949 or Patricia Taylor, Manager, Basic Groceries and Point-of-Sale Rebates, at (905) 721-4106. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Respectfully,
Marcel Boivin
Interim Director
General Operations & Border Issues Division
Excise and GST/HST Rulings Directorate
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